48 EF9:09 AF5111 Assignment 1.pdf QQ ... 1 AF5111 Accounting for Corporations 2021/2022 Semester 1 Assignment 1 4 Interest expense The following list of balances was taken from the accounts of Faust Ltd as at 31 December 2020, the end of its most recent financial year: Notes Dr Cr $000 $000 Revenue 33.600 Cost of sales 24,050 Inventory, as at 31 December 2020 6 1,350 Administrative expenses 8 4.530 Distribution costs 1,880 Dividends paid 950 Other operating income 640 Over-provision for corporation tax for 2019 56 Investments 1,250 Investment income 130 300 Properties at valuation: Land 800 Buildings 8,000 Plant and machinery 2 4,200 Accumulated depreciation: .. Buildings 3 640 Plant and machinery 2,3 2,140 Proceeds from sale of non-current assets ACCES 80 Accounts receivable and payable 4.500 1,840 Allowance for doubtful debts, as at 1 January 2020 5 85 Cash at bank and in hand 98 Bank loans 1,800 10% Debentures (due in 2024) 1.250 Issued share capital (5 million ordinary shares) 6,000 Revaluation surplus 600 Retained earnings 3,047 51.908 51.908 cings 9 1 [ G/ 9 III o o Rullo 48 EF9:09 AF5111 Assignment 1.pdf QQ The following additional information available: (1) Faust Ltd's issued share capital as at 1 January 2020 consisted of 4,000,000 ordinary shares. During June 2020 the company made a 1 for 8 bonus issue by capitalising profits at a value of $1 per bonus share. In October 2020 the company made a rights issue of 1 for 9 ordinary shares at $1.50 a share which was fully subscribed and fully paid. "These transactions have been correctly recorded the ledger (2) During the year ended 31 December 2020 plant and machinery custing $200,000 was sold. The plant had been depreciated by $140,000 and was sold for $80,000. The proceeds of $80,000 have been recorded in the accounts but no other entries have yet been made in respect of this disposal. (3) Depreciation for the year ended 31 December 2020 has yet to be provided for. The company's depreciation policies are: 2 Land 0% 2% straight line method Plant and machinery 20% reducing balance method Buildings Depreciation is to be provided for on a full year basis. The buildings are employed for administration purposes. (4) Non-current investments are classified as fair value through other comprehensive income. The fair value of the company's investments at 31 December 2020 is $1,100,000. (5) The allowance for doubtful debts is to be increased to $180,000. Bad debt is classified as distribution expense by Faust Ltd. (6) Certain items valued in the figure for inventory as at 31 December 2020 at $15,000 should have been written down to their net realisable value of $4.000. (7) Corporation tax on the profit for the year ended 31 December 2020 has been estimated at $960,000. (8) Shortly after 31 December 2020 Faust Ltd discovered errors in its accounts which meant that administrative expenses of $627,000 have been incorrectly included in the figures for the year ended 31 December 2020. Faust Lid has calculated that $450,000 of these exnenses relate to the vear ender 21 December 2010 and $177000 to the vear ended 21 [D G 19 O